Shell Defies Oil Price Slump with 11% Profit Surge, Boosts Shareholder Returns
LONDON – In a display of resilience against turbulent market forces, Shell PLC reported an 11% rise in annual net profit for 2025, reaching $17.84 billion. The British energy behemoth managed to navigate a year of declining oil and gas prices through a combination of increased production volumes, stringent cost controls, and strategic portfolio shifts.
The company's full-year results, released Thursday, revealed a complex picture. While headline profit after tax rose from $16.1 billion in 2024, underlying earnings—which adjust for volatile energy prices and one-off items—fell 22% to $18.53 billion. The final quarter proved particularly challenging, with net profit down 22% sequentially to $4.1 billion, a period one analyst termed "a quarter to forget."
"The volatility of the oil price inevitably had an effect as tepid demand and oversupply put a dampener on any price progress," noted Richard Hunter, Head of Markets at Interactive Investor. The Brent crude benchmark traded around $68.33 per barrel on results day, reflecting persistent pressures from OPEC+ output decisions and geopolitical uncertainties.
CEO Wael Sawan emphasized the company's operational fortitude. "In Q4, despite lower earnings... cash delivery remained solid," he stated. Shell responded by raising its dividend and launching a new $3.5 billion share buyback program, signaling confidence in its financial health. Nevertheless, Shell's shares dipped 1.9% in London trading, underperforming the broader FTSE 100 index.
The strategic path forward, as outlined by Sawan, hinges on "lower costs, further performance improvements supported by the transformative potential of AI, and a higher-returning portfolio." This focus accompanies a notable strategic pivot: Shell recently exited two North Sea offshore wind projects, sharpening its emphasis on its core oil and gas business and scaling back some climate ambitions in favor of profitability—a move mirrored by several industry peers.
The financial report was shadowed by ongoing climate litigation. Survivors of 2021's deadly Typhoon Rai in the Philippines have filed a lawsuit against Shell in a UK court, seeking compensation for climate-related damages allegedly linked to the company's emissions.
As Shell positions itself as a "more resilient organisation" entering 2026, the market's reaction suggests investors are weighing strong shareholder returns against the long-term uncertainties of energy transition and climate accountability.
Market Voices
Eleanor Vance, Energy Analyst at Stirling Capital: "Shell's cost discipline is impressive. In this price environment, generating cash and boosting buybacks demonstrates a lean operational model. The AI-driven efficiency push could be a significant margin protector moving forward."
Marcus Thorne, Portfolio Manager: "The dividend hike and buyback are clear positives for income-focused investors. However, the steep drop in underlying earnings exposes their core vulnerability to commodity cycles. The retreat from renewables raises questions about long-term strategy beyond fossil fuels."
Dr. Anya Sharma, Climate Policy Economist: "This is a stark lesson in corporate prioritization. Profits are up, but so is their carbon footprint ambition down. Leveraging AI to extract more fossil fuels faster is a tragic misuse of technology while communities facing climate disasters are suing them for survival. It's shareholder value over planetary value."
David Chen, Risk Assessment Director: "The legal action from the Philippines is a bellwether. It directly ties operational emissions to specific climate disasters. This financial-engine success story might be building a significant liability fortress for the future. Investors are not pricing this in yet."